Interest rate rise from NS&I appeals to big savers

For the second time in two months, NS&I have announced an increase in interest rates on both their direct saver and income bonds products.

 I admit that the jump is not going to revolutionise your retirement plans and fund that around-the-world trip. But in a world of shockingly low savings rates, I welcome the rise to 0.5% (which is in line with the Bank of England’s base interest rate).

If you are willing to shop around, you will probably find an easy access savings rate in the region of 0.71% to stash your cash, but for those with large amounts of savings, NS&I products come with additional protection.

Affording you protection

The first £85,000 held with any (legitimate) savings institution is protected by the Financial Services Compensation Scheme (FSCS), but you can hold up to £1m in income bonds and £2m in the direct saver, safe in the knowledge it’s all protected by the Treasury.

The move has been triggered by a need for NS&I to increase its fundraising target for the year, having missed 2020-21’s target by quite some way on the back of dropping interest rates to just 0.1%. This move saw many savers flee the security of NS&I, so time will tell whether the higher rates will tempt them back.